Human liver cancer can be divided into two broad categories that are characterized by activation of -catenin and genomic instability, respectively. We investigated the role of b-catenin activation and genomic instability in the sequential steps of mouse hepatocarcinogenesis. A large collection of preneoplastic and neoplastic liver lesions from c-myc, TGF- , E2F-1, c-myc/TGF- and c-myc/E2F-1 transgenic mice was analyzed for -catenin mutations and deletions by PCR and sequencing screening. Activation of -catenin was investigated by immunohistochemistry (IHC). The RAPD method was used to assess the overall genomic instability in the same lesions. Chromosomal loci affected by genomic alterations were determined by microsatellite analysis. Expression of alpha-fetoprotein (AFP) was determined by IHC as a prognostic marker. Liver tumors from the transgenic mouse lines could be divided in two categories. The first category, best exemplified by c-myc/E2F-1 HCCs, was characterized by high frequency of -catenin activation in the presence of a relatively stable genome and low AFP levels. The second category, represented by c-myc/TGF- HCCs, displayed low rate of -catenin activation but extensive genomic instability with recurrent loss of heterozygosity at chromosomes 1, 2, 4, 6, 7, 9, 12, 14, X. The genomic instability was evident from early dysplastic stage and occurred concomitantly with elevated expression of AFP. The data indicate that -catenin activation and genomic instability define two major genetic events during development of mouse liver tumors, similar to those described for human HCCs. These transgenic mice provide suitable genetic systems for elucidating the molecular basis of human HCC.